May the 4th be with you: Economics of Star Wars

Economics students, as all those students specializing in a particular field, love to share memes about their favorite subject, like jokes about strange convergence theorems, weird topological spaces, or absurd economic policy statements. However, it turns out that at least one day a year our nerdy preferences align, like planets would do, with those of the people outside the world of supply and demand, in name of the movie series that makes all nerd hearts beat: Star Wars! (If you thought it was Star Trek please leave this page!)

May the 4th, which is pronounced as “May the Force” if you studied English with Jar Jar Binks or if you are drunk enough after a night out in a disreputable bar of Tatooine with Han Solo, is the day chosen by Star Wars fans to celebrate the saga. Actually, it seems that this word pun was used for the first time not by a geeky guy brandishing a Made-in-Taiwan lightsaber but by the Conservative Party to wish good luck to the new elected Prime Minister Margaret Thatcher in 1979, “May the Fourth Be with You, Maggie. Congratulations.” [1] Too much culture already, let’s go back to the point.

Fun apart, we like the plot of Star Wars because it could be used to explain many of the real world past and current issues in political economy and international trade. Consider for instance the beginning of the story: Qui-Gon Jinn and his apprentice Obi-Wan Kenobi have to negotiate with the Trade Federation, which blockaded the planet Naboo as a protest against the Galactic Republic taxation of commercial routes. Sound realistic, doesn’t it?

The storyline continues with political conspiracies, taking us across the galaxy from highly developed planets where the production process is made mainly by droids to poor constellations where aliens harvest or starve, from growing free trade zones to stagnating stars. This also reminds us the issues our fellows from the Barcelona GSE International Trade, Finance, and Development (ITFD) Program are studying day after day. Investopedia [2] tells you all need to know about the “economics” of Star Wars galaxy, while Mark Thorton wrote a couple of interesting blog posts [3] for the Mises Institute discussing it from a political economy point of view, which, drawing from the Austrian tradition, is a liberal one. Indeed he defines The Phantom Menace as “one of the finest allegories on classical liberal political economy to ever appear on screen.”

Sometimes we just want to quote the saga to paint a little our mathematically intensive works: it is the case of Brodeur et al. (2016) who titled their paper on econometrics and the worry of every researcher (getting as many stars as possible on his regression coefficients) “Star Wars: The Empirics Strike Back.”

Some other times we definitely go wild with creativity, as Zachary Feinstein, a financial engineer who estimated the cost of building the two Death Stars and the loss caused by their destruction due to the Rebels. His paper “It’s a Trap: Emperor Palpatine’s Poison Pill”[4] not only does an accurate accounting of the aforementioned costs in terms of Gross Galactic Product, but also analyses the systemic risk implication of such a disruption on the galactic banking and financial system. According to the author: “this would have been worse than the Great Depression. It would have been beyond anything that we’ve ever seen on Earth.” [5]

At this point it seems legit to ask ourselves: among the famous people named Lucas, are economists more like Robert or George?

No matter whether you are a galactic empiricist or a interstellar growth theorist, as an economist you have a lot of reasons to love Star Wars and watch the whole saga again or do it for the first time if you haven’t done it yet (shame!). And, let’s confess it, we would all like Yoda’s wisdom helping us during our homework nights at the library, of course keeping him away from Latex (imagine the mess caused by convoluted his talking way). Or even better, Chewbacca as a partner in crime when we have to go to an exam revision at the professor’s office.